Some cannabis industry executives talk about a $150 billion global marijuana market. This number stems from a United Nations report, which gives it some credibility. What isn't mentioned as frequently, though, is that the figure includes mainly illegal sales of marijuana for recreational purposes. Currently, only Canada and Uruguay allow the legal use of recreational marijuana, with Mexico likely to join their ranks in the near future.

Granted, 11 U.S. states have legalized recreational marijuana, including the biggest prize of all -- California. More countries have also legalized medical marijuana, with Germany and the United Kingdom deserving special note. However, Aurora can't enter the U.S. market as long as marijuana is illegal at the federal level. And it remains to be seen how quickly international medical marijuana markets actually grow.

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Another related variable that's important to Aurora's future is how quickly overall supply will increase during the next five years. A supply glut is almost certainly on the way in Canada within two or three years. If international growth isn't strong enough, Aurora Cannabis and its peers could face an environment with sharply declining prices.

Speaking of those peers, what happens with them will directly affect Aurora. Canopy Growth lined up a big partner, alcoholic beverage maker Constellation Brands, along with a boatload of cash from the deal. Tobacco giant Altria is buying a 45% stake in Cronos Group. Whether or not Aurora lands a major partner outside of the cannabis industry will greatly impact its competitive position in the years ahead.

Opposing predictions

Let's look at two predictions with extremely different outcomes for Aurora Cannabis.

Probably the most pessimistic outlook for Aurora involves four scenarios. First, the global marijuana market expands much more slowly than anyone expects. Second, production capacity skyrockets like many anticipate it will if not faster. Third, marijuana remains illegal at the federal level in the U.S. And fourth, Aurora doesn't secure a nice deal with a big partner.

If all four of these developments occur, Aurora could find itself in a highly commoditized market where low prices result in very low profit margins. Without a major partner to lean on, the company would potentially have to issue more shares (as it has done a whole lot over the last couple of years) to raise cash, diluting the value of existing shares. If this prediction comes true, Aurora's market cap five years from now could be significantly below its current market cap of around $6 billion.

What about the optimistic future for Aurora? It would be the exact opposite of the above.

Countries across the world legalize medical marijuana like dominoes falling in a row. Several of the largest ones also legalize recreational marijuana, including the U.S. Industry capacity increases, but many smaller players don't come close to achieving the production levels that they have projected. And Aurora secures a bigger deal with a bigger company outside of the cannabis industry than either Canopy Growth or Cronos Group did.

In this rosy future, Aurora Cannabis could be described with a single number -- No. 1. The company would be the biggest competitor in a huge global market well on its way to hit and perhaps surpass the $150 billion mark.

Most likely scenario

Is either of these scenarios likely for Aurora Cannabis? Probably not. Instead, the most likely scenario is somewhere in the middle.

Arcview Market Research and BDS Analytics project that the global legal marijuana market will reach $32 billion by 2022. If we extrapolate that rate of growth out one more year, it would put worldwide marijuana sales at close to $41 billion five years from now.

Much of that market would be in the U.S. However, the odds of the U.S. making changes to allow states to legalize marijuana without violating federal laws appear to be better than ever because of the November 2018 U.S. elections. If that happens, Aurora would be able to enter the U.S. marijuana market.

Aurora could realistically see a total addressable annual market of more than $60 billion within the next five years. The smart money would be on a major company outside of the cannabis industry teaming up with Aurora with this big an opportunity.

With its massive production capacity and a big partner at its side, it doesn't require too much of a stretch of the imagination to see Aurora capturing 10% of the global market. That would mean $6 billion in annual revenue, which would likely translate to a market cap for the company of at least $24 billion and perhaps significantly more.

Will this scenario really happen? Maybe not. But it's not far-fetched. And Aurora could be worth a lot more than it is now in variations of the scenario that aren't as optimistic. Where will Aurora Cannabis be in five years? Probably in pretty good shape.

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